Ponzi scandal sparks Austrade rethink after Pearls swindle

The Australian 12:00AM January 10, 2017

Anthony Klan

Federal government agency Austrade has introduced “eligibility checks” for the businesses it spruiks after it introduced Australian companies to India’s biggest Ponzi scheme.

Last February Austrade launched what the federal government said would be a “detailed ­investigation” into the agency’s promoting of the now collapsed $10 billion Pearls Group scam, ­despite Indian authorities having been investigating it for more than a decade.

Austrade, which is taxpayer funded to the tune of $200 million a year, said it conducted no due diligence on any of the Australian companies it promoted overseas, or on the foreign companies it pushed to local businesses.

Austrade has failed to produce any details of that investigation but spokesman Paul Sanda said the agency had “reviewed its records” of its dealings with Pearls.

“Additional guidelines related to eligibility checks have been ­implemented, including the criteria upon which decisions are based,” he said.

It remained unclear what form those checks now took and whether Austrade would reintroduce due diligence checks, which The Australian has been told had been done in the past as routine.

In March 2009, Austrade introduced Gold Coast property developers Paul Brinsmead and Peter Madrers — whose Resort Corp property group had just collapsed, owing $300m — to Pearls Group in India.

The two businessmen and Pearls management formed Pearls Australasia and, using Pearls funds, bought the Sheraton Mirage Resort on the Gold Coast for $62m and spent a further $20m on refurbishments.

The Sheraton Mirage is in the process of being sold, with a ­mooted price of $140m. A class ­action of about 46,000 Indian ­investors is currently fighting Mr Brinsmead and Mr Madrers in court over the proceeds.

Pearls, run by Indian businessman Nirmal Singh Bhangoo who was jailed last January, raised $10bn from an estimated 50 million investors under the guise of selling land parcels which often did not exist, before it collapsed spectacularly.

Austrade’s annual reports show Pearls was a key partner in the government agency’s Business Club Australia program in Delhi, delivered to coincide with the Commonwealth Games in October 2010 and held “within the purpose-built marquee on the high commissioner’s lawn”.

Also to be introduced to Pearls at the Delhi event was South Australia’s Barossa Valley wine group Wolf Blass.

In its annual report, and referring to Pearls as an “Indian wine distributor”, Austrade states Pearls “launched the Wolf Blass label into the Indian market” following the Games introduction.

The parent company of Wolf Blass, the listed Treasury Wine ­Estates, did not comment yesterday. But it is understood that partnership with Pearls was short-lived.

Austrade launched its investigation into its dealings with Pearls early last year after a string of ­exposes in The Australian